With China’s economy gaining global strength, the renminbi is set to become a global reserve currency, Zhu Min, deputy managing director of the International Monetary Fund, said Tuesday at an economic forum in Hong Kong.
China avoided a hard landing last year and recorded economic growth of 8.2%, Zhu said at the Asia Financial Forum. Yet “the key to China’s economy is not its growth rate but the quality of growth,” he said.
“China needs to boost its domestic market growth. It is a must rather than an option,” he added.
Analysts were worried last year about a potential collapse of the eurozone and the United States’ fiscal cliff, but those two issues have largely been avoided, he said. “This year will be better than last year,” Zhu concluded.
Commenting on the contentious issue of the Chinese currency’s exchange rate, Zhu, a former deputy governor of the People’s Bank of China, said the yuan is more reasonably valued against other currencies these days.
On Japan’s push for a weaker yen, Zhu said Japan triggered a wave of monetary easing in many economies, but the effects of the global financial crisis four years ago are still being seen.
Japan’s main issue was a lack of demand, he said. But competitiveness could be enhanced not only from a weaker currency but from better technology, R&D and branding efforts.
On innovative financial services, Zhu reiterated the IMF’s stance of supporting innovative ideas, but added that the sector should focus on providing services to the public, instead on focusing on making profits for itself.